Tax expenditures have become a widely used tool of government in the United States, with the fiscal impact now rivaling appropriations for discretionary spending. But tax expenditures raise important accountability dilemmas and tradeoffs for the nation. We show that, despite repeated recommendations by oversight agencies to address the significant shortfalls in performance associated with this tool, policymakers and public managers alike remain ambivalent about instituting stronger accountability provisions. Our analysis lends support to a more complicated image of principals emerging in the public management literature, one where principals do not always take action to hold their agents to account. The case of tax expenditures calls for greater attention in public management theory and research to the diverse roles that principals play in program implementation and accountability.